After seeing sales of new single family homes decline for four straight months, we finally saw a rebound during September, with new home sales in this category rising by 5.7%, according to the Commerce Department.
Associated Press reported that one of the biggest reasons for the jump was that builders finally saw sense and reduced their prices for many new builds, allowing them to compete with the huge numbers of foreclosed properties on the market. According to AP, there was a 3.1% drop in the median sales price for newly built single-family homes, down to $204,000, which is the lowest figure since October of last year.
National Association of Home Builders Chairman Bob Nielsen said that the report showed that the housing market was finally picking up at long last:
“Today’s report highlights the gradual improvement in housing market conditions that is becoming evident in certain pockets of the country, as consumers who can surmount very restrictive lending standards to qualify for a favorable mortgage rate seize on this opportunity to buy. The latest numbers also reveal that first-time buyers are driving the new-homes market right now, as evidenced by the volume of lower-priced, entry-level homes under contract.”
Regionally, the south of the country saw the biggest gains in sales of new homes. There, new single-family home sales increased by 11.2%. The West also saw big rises, with 9.7% more new homes being sold in September than the previous month.
Not everywhere saw an improvement however. New home sales dropped by 12.2% in the Midwest, and 4.2% in the Northeast, according to the Commerce Department’s report.
Builders have the South and the West to thank for their huge gains, which managed to offset the drop in sales in other regions. Altogether, September helped the seasonally adjusted rate of annual home sales rise to 313,000 homes, although this is still a long way off the 700,000 mark that is considered to be healthy by most economists.
As for the inventory of new homes on the market waiting to be sold, this held at its record low of 163,000 units for the previous month, which is enough to last us for 6.2 months at the current rate of home sales.